Forest, paper & packaging

Forest paper & packaging

Forest, paper & packaging CEOs see tough times ahead and worry about economic and business risks. Adapting more quickly to changing technology is an issue. They’re already collaborating along the supply chain, and many are improving their environmental footprint too.

Forest, paper & packaging CEOs see tough times ahead.
Sector CEOs have been less confident about short term growth for several years; this year that’s especially true when it comes to prospects for the industry. Only about half expect to see growth, compared to 68% of CEOs overall. And this year they’re less optimistic about their own prospects looking farther forward too. That’s probably due to sector worries about a wide range of risks; 85% are concerned about continued slow or negative growth in developed economies compared to 70% of CEOs overall. Far more also worry about exchange rate volatility, high or volatile energy costs, and high or volatile raw material prices. And with overcapacity already an issue in some markets, it’s not surprising that 60% of forest, paper & packaging CEOs are concerned about new market entrants.

So they’re looking for the right growth markets and trimming costs
Latin America is high on the sector’s deal agenda, reflecting the availability of much faster-growing timber (eucalyptus), the increased uses to which this can be put, and the vibrancy of the pulp industry. The industry is also still keeping the focus on costs, with 77% planning to trim the fat in the next 12 months.

And expecting technology to have a big impact.
81% of forest, paper & packaging CEOs believe that technological advances such as the digital economy, social media, mobile devices and big data will transform their business over the next five years. That reflects the impact of the shift to mobile on paper demand, but technology is helping the industry too.

But the industry needs to pick up the pace to adapt
92% of sector CEOs acknowledge they’ll need to update technology investment strategies. Only 23% have actually made changes, though – fewer than across the overall sample.

More -- 33% -- have already started revamping R&D & innovation capacity, reflecting the effort the industry is putting into innovation in diverse areas like nanotechnology, genetic manipulation, new applications for fibre, dissolving pulp uses, and new packaging solutions. But only 17% of sector executives believe their R&D departments are well-prepared for the future.

The situation is similar when it comes to big data. Nearly as many sector CEOs – 87% -- see a need to change their approach to data and data analytics, but only 17% already have a change programme underway or completed. Again, that’s less than across the sample as a whole. And only 35% think their IT department is well-prepared.

while continuing to collaborate along the supply chain.
Forest, paper & packaging CEOs have been working hard to improve their supply chains in response to transformative trends – more say their companies have already begun or completed change programmes. That’s already starting to pay off: 54% of sector CEOs say the level of trust their supply chain partners have in their industry has improved.

Sustainability continues to be a priority.
Nearly two-thirds of sector CEOs also pointed to resource scarcity and climate change as driving transformation –more than across the sample as a whole and reflected a continued commitment by the sector to reduce its environmental footprint. That’s part of a broader effort by many industry players to be good corporate citizens.

And so does talent.
77% of forest, paper & packaging CEOs are concerned about the availability of key skills, putting it high on their list of business risks. Nearly all of them—91% recognise a need to change talent strategies to adapt, but only about a third have already begun or completely the process. 19% don’t think their HR department is prepared to execute, though, and just 31% believe HR is well-prepared.

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CEO interview quotes

"I think that within the next 12 months we will still see a very slow economy, particularly in Europe. We are seeing some positive signs in the US, but I think that will be slow also. I don’t see any dramatic change in a positive way."

".. innovation is so important. Every time we have a new feature out we can discuss price with the consumers, we can discuss it with the retailers. But if you have the same product all the time, then of course price increases are impossible."

"If you look at the recruitment market in some countries today in Western Europe, then of course there is a challenge because of the elderly population and the lack of young people coming onto the market."